Shareholders appeared caught off guard as the Los Gatos, Calif., company reported a better-than-expected addition of 2.05 million new domestic subscribers to its video streaming service. Netflix still fell short of reaching its original goal of gaining 7 million U.S. customers in 2012, missing it by 1.52 million, but its surprising profit of $8 million in the fourth quarter proved the company can still make money even as it spends heavily to acquire new content.

Shares traded 43% higher at $147.23 early Thursday, hitting a 16-month high. The stock has nearly tripled since August.

Billionaire investor Carl Icahn was certainly a big winner among Netflix investors after he reported a 10% stake in the company in November, buying shares at around $58 a share. Mr. Icahn at that time suggested Netflix might offer an attractive acquisition target to more well-capitalized companies.

Chief Executive Reed Hastings tied the company’s better-than-expected growth directly to its spending on new films and TV shows, describing a “virtuous cycle” of expanding content attracting new subscribers, which in turn allows the company to keep growing its library.

“What propels our growth is that continuing content,” Mr. Hastings said during the company’s Wednesday conference call. “We’d like to get more movies, we’d like to get more prior-season television, we’d like to have more originals.”

The company attributed much of its end-of-year growth to holiday consumers snapping up tablet computers and smart TVs, both of which make it easy to sign onto Netflix’s $8 per-month streaming service.

“Netflix is a primary beneficiary of the shift toward mobile devices,” J.P. Morgan analyst Doug Anmuth wrote in a note to clients as the investment bank upgraded Netflix’s stock to overweight, a bullish rating. “We believe the proliferation of tablets–especially low end devices with greater portability and more attractive price points–has led to incremental viewing for Netflix subscribers and improved the overall accessibility of the service.

“Netflix has invested heavily in new content over the past year, planning three original programs including a reboot of the critically praised “Arrested Development” series. The company in December signed a three-year licensing agreement for Walt Disney movies worth an estimated $300 million a year, according to The Wall Street Journal.

The deal proved Netflix’s intent to compete seriously against pay-TV channels like Time Warner 's HBO and Starz. Online rivals such as Amazon have quickly added more content of their own, a concern that caused many analysts to warn Netflix’s dominant status in media streaming would soon give way to a more competitive–and less profitable–environment.

Netflix sought to disprove that idea by comparing its 200 most popular TV and film titles last quarter with content on Amazon Prime, Coinstar’s Redbox Instant and Hulu, reporting 113 titles only Netflix could offer.

“Today in the United States, Amazon Prime’s content has started to be mostly a subset of ours and is,” Mr. Hastings said Wednesday. “I think over time there’s a pretty good likelihood that we’ll compete like we compete with HBO. That is, we’ll all have different shows and all be competing for dollars and attention, but not have the same content.”